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Income Tax Appellate Tribunal, PUNE “A” BENCH, PUNE
Before: SHRI S.S. GODARA & SHRI G. D. PADMAHSHALI
ORDER PER G. D. PADMAHSHALI, AM; By the present twin appeals, the assessee challenges the orders of Commissioner of Income Tax (Appeals)- 11, Pune [for short “CIT(A)”] dt. 23/12/2022 passed u/s 250 of the Income-tax Act, 1961 [for short “the Act”].
ITAT-Pune Page 1 of 10 Gera Reality India Pvt. Ltd., &65/PUN/2023 AY: 2013-14 &2015-16 2. Since the substantive issue in both these appeals is identical, with the agreement of parties present, both these appeals are heard together for a consolidated order; resultantly the adjudication in lead case ITA No. 65/PUN/2023.
After hearing rival contentions of both the parties, subject to the rule 18 of Income Tax Appellate Rules, 1963 [for short ITAT-Rules] we examined the material placed on record and noted that, 3.1 The appellant is a company engaged in the business of construction and development of properties whereupon a search u/s 132 and survey action u/s 133A of the Act were conducted at the registered office and site offices of the appellant company on 11/9/2014.
3.2 Pursuant to aforestated action, consequential assessments u/s 143(3) r.w.s.153A of the Act in the case of the appellant were completed for ITAT-Pune Page 2 of 10 Gera Reality India Pvt. Ltd., &65/PUN/2023 AY: 2013-14 &2015-16 three assessment years [for short “AY”] by the Asstt. Commissioner of Income Tax Central Circle-1(3) Pune vide his order dt. 31/12/2016 with the following disallowances in computing total income of the appellant; Sr Additions or AY AY AY Disallowance 2013-14 2014-15 2015-16 1. Advertisement & Sales 2,70,19,496 -- 6,24,39,879 Promotions expenses 2. Legal & Professional -- 63,27,722 24,15,861 Fees 3.3 The assessee company agitated the aforestated disallowance in an appeal before Ld. CIT(A), who in turn based on findings dilated in remand report has allowed the substantial but part relief to the assessee and thereby restricted the disallowance to following; Sr Additions or AY AY AY Disallowance 2013-14 2014-15 2015-16 1. Advertisement & Sales 5,89,482 -- 79,11,199 Promotions expenses 2. Legal & Professional -- -- 7,73,048 Fees ITAT-Pune Page 3 of 10 Gera Reality India Pvt. Ltd., ITA No 64 &65/PUN/2023 AY: 2013-14 &2015-16 3.4 Yet aggrieved by the aforesaid balance disallowance sustained by the Ld. first appellate authority [for short “FAA”], the assessee for AY 2013-14 & 2015-16 is in appeal before us on the following grounds; “I. The learned (ld) CIT(A) erred in confirming a disallowance of Rs.5,89,482, vis-a-vis the disallowance made by the Assessing Officer (AO) of Rs.2,70,19,496, in the assessment order under section 143(3), r.w.s,153A of the Income-Tax Act, 1961 (the Act), wherein the AO has made the aforesaid disallowance out of advertisement and sales promotion expenses. II. The ld CIT(A) grossly erred in not taking into consideration the fact that the nature of the payment and parties to whom the payments had been made are either the same or similar for earlier AYs 2007-08, 2009-10 and 2011-12, where no addition has been made in respect of the aforesaid expenses in the assessment orders passed under section 143(3) of the Act. III. The ld CIT(A) grossly erred in not taking into consideration the fact that no such disallowance has been made in respect of assessments completed by the same AO under section 143(3), r.w.s.l53A of the Act, for AYs 2009-10, 2010-11, 2011-12 and 2014-15. IV. The ld CIT(A) has grossly erred in not considering the following relevant facts :
ITAT-Pune Page 4 of 10 Gera Reality India Pvt. Ltd., &65/PUN/2023 AY: 2013-14 &2015-16
All the payments had been made by account payee cheque.
2. Tax had been deducted at source from all the aforesaid payments, as required under the relevant provisions of the Act. 3. All the details in respect of all the payees and TDS deducted from the payments made to them had been furnished, vide the submissions made before the CIT(A). V. The ld CIT(A) had grossly erred in not taking into consideration any of the submissions made by the appellant, vide the following letters furnished before him :
1. 1. Submissions before the CIT(A), dt. 9.8.2017.
2. Additional submissions before the CIT(A), dt.22.9.2017, wherein the list of parties to whom payments had been made for advertisement and sales promotion expenses, had been enclosed.
3. Further additional submissions before the CIT(A), dt. 11.3.2019, wherein details of TDS in respect of advertisement and sales promotion expenses for AY 2013-14, have been enclosed and besides, comments on the first remand report have also been enclosed. VI. The ld CIT(A) has grossly erred in not even considering the judgement of Bombay High Court, in the case of Pr.CIT Vs Chawala Interbuild ITAT-Pune Page 5 of 10 Gera Reality India Pvt. Ltd., &65/PUN/2023 AY: 2013-14 &2015-16 Construction Co. P. Ltd [2019] 412 ITR 152 (Bom). In the aforesaid case, the assessee had filed details of the concerned thirteen parties with their PAN, addresses, amounts of TDS, dates of bills, dates of cheques, etc. It was held by High Court that the assessee had done everything possible to produce the necessary evidence which indicated that payments had been made to the parties concerned. VII. The ld CIT(A) has grossly erred in passing the appellate order totally on the basis of the facts furnished by the AO, vide remand reports and totally ignoring the aforesaid submissions made by the appellant before the CIT(A). VIII. All the aforesaid Grounds of Appeal are without prejudice to one another. IX. The appellant craves leave to add, alter, amend, modify or delete any or all the aforesaid Grounds of appeal.”
4. It would not be out of the box to state that the grounds raised in the extant appeal are inconsonance with rule 8 of ITAT-Rules. For adjudicating them it shall adequate to state that the grounds raised are neither legal nor technical but factual and are collectively directed against the disallowances sustained by the Ld. FAA.
ITAT-Pune Page 6 of 10 Gera Reality India Pvt. Ltd., &65/PUN/2023 AY: 2013-14 &2015-16 5. From the vehement argument of Ld. Senior Counsel for the appellant [for short “AR”] in the light of material adverted during the course of hearing we observed that, the appellant group was subjected to search u/s 132 as well survey action 133A of the Act simultaneously at the registered office and site offices of the assessee company on 11/09/2014 wherein certain incriminating material, documents were seized and impounded. Pursuant aforestated actions on the appellant consequential assessment proceedings u/s 153A were initiated and bearing in mind the return of income filed [for short “ITR”] by the appellant, the assessment proceedings after due enquiry were culminated making disallowances of expenses (as tabulated in foregoing para 3.2 herein above) holding them as non-genuine on account of appellant’s failure to substantiate the said business expenditure has actually were incurred by adducing evidentiary documents including accounts, bills, vouchers and details of payee with a PAN etc. therefore.
ITAT-Pune Page 7 of 10 Gera Reality India Pvt. Ltd., &65/PUN/2023 AY: 2013-14 &2015-16 6. We further observed that, during the first appellant proceedings, the appellant in support of claim of expenditure for allowance has adduced certain evidential documents u/r 46A of Income Tax Rules, 1962 [for short IT-Rules], which Ld. FAA before admitting them remanded to Ld. AO for verification. When first remand did not effectively establish the claim of the appellant for the want of appearance before Ld. AO, in all the fairness the Ld. CIT(A) remanded the issue again with a specific direction to deal therewith. The Ld. AO after satisfying himself with the corroborative evidences presented by the assessee as against the expenditure initially disallowed, has restricted the disallowances to the figures as tabulated at para 3.3 above. The Ld. CIT(A) after vouching them in the light of subsequent remand report has deleted the disallowances to the extent the assessee company could successfully substantiate them with acceptable evidences, which in our view remained flawless.
ITAT-Pune Page 8 of 10 Gera Reality India Pvt. Ltd., &65/PUN/2023 AY: 2013-14 &2015-16 7. In the light of section 37(1) of the Act, the absence of supportive bills, invoices, vouchers and failure on the part of appellant to demonstrate the impugned balance expenditure was indeed incurred during the course of conduct of its business leaves no scope for allowance merely on the proposition that such expenditure were indeed transacted through banking channel or were subjected to tax deduction i.e. TDS.
We are heedful to state that, the very object of Income Tax law is to arrive at the correct computation of income for taxation and in doing so the assessee against its revenue/income is entitled to claim deduction of legitimate and genuine expenditure incurred. This mean when assessee fails to discharge the primary onus by adducing evidence to establish legitimacy and genuineness of such expenditure claimed to have incurred by it, then disallowance of while computing the taxable income becomes inherent and which cannot be faulted with in view of ITAT-Pune Page 9 of 10 Gera Reality India Pvt. Ltd., &65/PUN/2023 AY: 2013-14 &2015-16 the Hon’ble Apex Court decision in ‘CIT Vs Calcutta Agency’ reported at 19 ITR 191 (SC) and ‘CIT Vs Indian Molasses’ reported at 78 ITR 474 (SC), and “I. H. Sugar Factory & oil Mils Pvt Ltd Vs CIT” reported at 125 ITR, 293 (SC).
In the light of aforestated discussion and in the absence of any deprecative material brought to our notice, we countenance the action of both the tax authorities below being faultless.
Resultantly, both the appeals of the assessee are DISMISSED. In terms of rule 34 of ITAT Rules, 1963 the order ispronounced in the open court on this Tuesday 28thday of March, 2023.
-S/d- -S/d- -S/d S/d- S. S. GODARA G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / PUNE ; दिन ांक / Dated : 01st day of May, 2023. आदेश की प्रधिधलधप अग्रेधिि / Copy of the Order forwarded to :
1. 1. अपऩलधथी / The Appellant. 2.प्रत्यथी / The Respondent.
3. The NFAC, Delhi (India) 4. The CIT, Central, Pune 5. DR, ITAT, “A” Bench, Pune. 6. गधर्ाफ़धइल / Guard File. आदेशधनपसधर / By Order वररष्ठ ननजऩ सनिव / Sr. Private Secretary आयकर अपऩलऩय न्यधयधनधकरण, पपणे / ITAT, Pune.
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